The automotive industry has encountered some well-documented speed bumps these past few years, but Kentucky is solidly positioned to keep the ride smooth.

Area Development Research Desk (Automotive Site Guide 2008)

Kentucky's automotive plants produce some of the nation's best-selling vehicles in three important segments - passenger car (the Toyota Camry, built in Georgetown), SUV (the Ford Explorer, Louisville), and premium sportscar (the Chevrolet Corvette, Bowling Green). Ford's popular F-series Super Duty pickup trucks also are made here.

Producing nearly 1.6 million cars and light trucks in 2007, Kentucky ranks third in total light vehicle production. With nearly 500 suppliers here as well, Kentucky sits at the hub of Auto Alley, that strip of Middle America that stretches from Michigan into the Deep South. In fact, nearly one-tenth of all cars and trucks produced in the United States are manufactured in Kentucky.

About 87,000 people work in the automotive industry in Kentucky, placing the state third in industry-related employment as a percent of total state employment.

Those numbers could all be rising dramatically as Kentucky becomes home for the ZAP. A partnership made up of Kentucky's Integrity Automotive LLC and the California-based Zero Air Pollution (ZAP) electric carmaker has chosen Simpson County as the location for a 1 million-square-foot facility to manufacture low-speed electric vehicles.

A tax incentive package worth up to $48 million was approved on August 15th by the Kentucky Economic Development Finance Authority to entice Integrity Automotive to locate its new North American auto manufacturing facility in Kentucky. ZAP's manufacturing operations are currently based in China. The incentives are based on the companies' commitment to create 4,000 new full-time jobs for Kentucky residents within the first four years of the project's completion.

Toyota's Deep Roots Continue to GrowTwo decades of tremendous growth in Kentucky continue to result in new vehicles that break the mold. Besides producing the conventional Camry, Solara, and Avalon, Toyota Motor Manufacturing Kentucky began in late 2006 producing the hybrid Camry. The company said its decision to build in the Bluegrass State was boosted in part by the Kentucky Environmental Stewardship Act, a new law that provides tax credits to companies manufacturing environmentally friendly products.

The Georgetown plant is also beginning production of the company's first crossover vehicle, the all-new Toyota Venza, for the 2009 model year.

Toyota started production in Kentucky in 1988, and its $5 billion Georgetown complex is the company's largest manufacturing facility outside Japan. With two vehicle production lines and a powertrain engine and axle facility, approximately 6,700 team members build more than 500,000 vehicles and over 500,000 engines each year.

The company was so delighted with its success here that it decided to locate both its North American manufacturing headquarters and its North American Parts Center in Kentucky. The headquarters is in Erlanger, and the parts center is in nearby Hebron. Together they employ nearly 1,800 additional people.

Steve St. Angelo, president of Toyota Motor Manufacturing Kentucky and senior vice president of Toyota Engineering and Manufacturing North America, says Kentucky's success can be attributed in part to its can-do spirit and dedication. "When Toyota came here 20 years ago, other people might have seen farmers, coal miners, or people working in grocery stores, but Toyota saw craftsmen - with skill, dedication, and hard work. And it has been very evident that Toyota was right, by the results we've accomplished in Georgetown. This plant has won more J.D. Power quality awards than any other plant in the world, and they're always raising the benchmark in quality. Our members have grown to be some of the most skillful auto makers in the world."

In April of 2008, Toyota Boshoku, a subsidiary of the automaker and a major supplier to Toyota, General Motors, and others, announced that it would expand its headquarters in Erlanger, just eight months after opening the office there. Likewise, Akebono, a major maker of automotive brake systems, opened its North American headquarters in Elizabethtown in 2007 after enjoying the payoff from its initial investment in the manufacturing sector. Another major supplier, Sekisui S-LEC America, which produces interlayer film and sound acoustic film for automotive glass use, celebrated the grand opening of its $43 million manufacturing plant in Clark County in the fall of 2007.

Ford Renews Its Faith in KentuckyWith two large assembly plants whose pedigree dates back nearly a century, Ford Motor Company has an exceptionally long and satisfying history with Kentucky. The Kentucky Jobs Retention Act, a new incentive program passed by the 2007 General Assembly, is helping ensure that Ford's legacy here continues to grow.

The Kentucky Economic Development Finance Authority approved up to $60 million in incentives to Ford over a 10-year period to secure a $200 million investment at the automaker's Kentucky Truck Plant for equipment and facility upgrades, technology upgrades, and the purchase of new machinery and equipment. The project will also include engineering costs necessary to implement the modernization upgrades. This means Ford can stay up to date and meet rapidly changing consumer preferences.

Despite unprecedented challenges facing the
auto industry, Ford announced in July of this year that both Louisville
plants remained firmly ensconced in the company's long-range plans. In
fact, Ford said, the Louisville Assembly Plant will be retooled for
production of smaller, more fuel-efficient passenger cars now popular
in Europe.

"When it comes to Ford Motor Company, Louisville has
had more lives than most cats," said Governor Steve Beshear after the
announcement. "Ford is making it perfectly clear that the company is
betting its future success in the automotive industry on Louisville,
Kentucky."

Ford's history here began in 1913, when Henry Ford
himself started a small factory near downtown Louisville. Two years
later, Model T's and other vehicles began rolling out of what was then
a cutting-edge industrial facility on South Third Street near the
University of Louisville. Ford operations moved to a new facility on
South Western Parkway in 1925, surviving the devastating flood of 1937
and a temporary conversion to military manufacturing during World War
II.

The South Western Parkway factory closed in 1955, replaced
by the much larger and more modern Louisville Assembly Plant on Fern
Valley Road near the Louisville airport. Fourteen years later, Ford
opened the Kentucky Truck Plant on the east side of town, at Westport
Road and Chamberlain Lane. Production continues to this day at both the
Fern Valley Road and Chamberlain Lane plants, with total employment of
around 6,000. The Kentucky Truck Plant, now 4.6 million square feet, is
the second-largest Ford assembly plant in North America.GM's New Beast Breaks FreeGeneral
Motors (GM) has a major plant here too - and exciting news as well. In
1981, GM moved production of the Chevrolet Corvette from St. Louis to
Bowling Green, Kentucky, which remains today as the exclusive home of
the iconic sportscar. The plant's 1,100 employees also build the
Cadillac XLR luxury roadster.

This summer, GM unveiled its most
spectacular Corvette ever, the limited-edition, supercharged 2009 ZR1,
which has been wowing automotive writers and has set gearheads on a
frenzied search for new hyperbole. We know of at least one writer who
has already ranked the new ZR1 among the 10 greatest American cars of
all time, and company officials promise the new 'Vette can outperform
anything on the market, including whatever prized supercar you'd care
to name.

The Corvette has such a devoted following that each
year, 140,000 sportscar enthusiasts from around the world visit Bowling
Green to experience the National Corvette Museum, located just a
quarter-mile from the assembly plant. The museum is undergoing a $9
million expansion to accommodate the crowds.

Other Kentucky AdvantagesOur manufacturing partners say Kentucky offers important advantages over most other states:

•
Central location. Besides greatly reducing the shipping costs of its
products, Kentucky's location also puts it smack-dab in the heart of
the auto supply industry. This allows manufacturers to rely on
just-in-time delivery of parts and saves money.• Low energy costs.
Year after year, coal-rich Kentucky offers some of the lowest
industrial power costs in the nation - in many cases, less than half
what it might cost to operate elsewhere.•
An administration that goes out of its way to accommodate
manufacturers. Kentucky has an experienced economic development staff
that understands business and works hard to reduce the red tape.•
Training assistance tailored to the manufacturer. One key Toyota
supplier, Toyotetsu America, said using the Economic Development
Cabinet's Bluegrass State Skills Corporation (BSSC) has saved the
company more than $112,000 training many of its 1,300 employees. A
state assistance package also allowed Toyotetsu to create a training
center at its Somerset facility that is used by other North American
plants.